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Ranking congressman to Richard Cordray: Are you resigning or not?

Updated August 29, 2017 at 12:11 PM;Posted August 29, 2017 at 12:05 PM

Consumer Financial Protection Bureau Director Richard Cordray could decide before the end of next weekend whether to resign and run for Ohio governor. But an influential Republican congressman wants Cordray to announce his intentions no later than Thursday.

Consumer Financial Protection Bureau Director Richard Cordray could decide before the end of next weekend whether to resign and run for Ohio governor. But an influential Republican congressman wants Cordray to announce his intentions no later than Thursday.(Steve Helber, Associated Press)

WASHINGTON -- If Richard Cordray decides to run for Ohio governor, he may have to make a decision by the end of next weekend. That's the political buzz, anyway, since Cordray -- director of the federal Consumer Financial Protection Bureau -- is scheduled to speak at an Ohio AFL-CIO Labor Day picnic in Cincinnati.

Cordray's federal position is supposed to be free of politics. So one of his chief critics in Congress today warned him again, this time in a letter: Don't put your political motives ahead of the public's interest if you are rushing to wrap up your current job.

And if you intend to quit, added Rep. Jeb Hensarling of Texas, chairman of the House Financial Services Committee, say so no later than Thursday.

Cordray, a former Ohio attorney general and a Democrat, has another year left in his five-year federal appointment. But with an Ohio governor's race next year, time is short to get in and start raising money. Several other Democrats have already said they are running, including former congresswoman Betty Sutton, Dayton Mayor Nan Whaley and former state Rep. Connie Pillich, so Cordray would have to prepare for a primary election.

Cordray has consistently refused to address whether he will run for governor but at least one statewide elected Democrat, Ohio Supreme Court Justice Bill O'Neill, has said he understands Cordray will. This has added to complaints by Washington Republicans including Hensarling, who say Cordray and his agency try to carry out an activist, liberal agenda that dampens consumer lending and ultimately harms the public. Hensarling last month asked for an investigation into whether Cordray is already engaging in partisan politics, which could violate federal law.

The bureau's defenders, including nearly all Democrats in Congress, say the bureau is doing what was needed for years: protecting consumers from predatory loans that harmed too many Americans. The bureau was created through the 2010 Dodd-Frank financial reforms, passed after a banking crisis nearly crippled the economy.

Cordray's bureau is working to finalize a rule that would make it harder for payday lenders to take advantage of low-income Americans who sometimes wind up deeply indebted as a result of the lenders' high interest rates. The rule might peg a borrower's ability to get a payday loan -- a loan that must be repaid through the borrower's next paycheck -- to a formula that considers his or her income and ability to repay it without taking out additional new loans. Each time an existing loan gets rolled into a new one, the interest owed essentially grows, ballooning if this is done repeatedly.

The payday lending industry and its defenders say a restrictive rule could ultimately deprive borrowers of last-ditch options and make it harder for them to feed their families or pay their rent. The industry serves to help people, not hurt them, defenders say.

Cordray's office said it is reviewing Hensarling's letter but had no further comment on the letter or on a possible Cordray anouncement.

Hensarling said in his letter that no later than this Thursday, Aug. 30, he wants "confirmation that you intend to serve your full statutory term" or, if not, "confirmation of the date on which you intend to resign from office."

As for the payday lending rule, Hensarling said he is concerned by media reports that Cordray hopes to finalize the rule before he leaves.

"These reports, which have not been rebutted by the bureau, suggest that your personal political ambitions may be informing your decisions," Hensarling said. Rushing to finalize a rule "to satisfy an arbitrary deadline necessitated by election dates" in Ohio would open the bureau to legal challenges," the committee chairman said.

Hensarling said he wants "your categorical denial" that political considerations have informed any aspect of the pending payday lending rule. He said he also wants "your assurance that all records related to this rulemaking will be preserved."

Is is doubtful Hensarling could do a thing if Cordray desn't answer by Thursday. Cordray's agency gets funding from the Federal Reserve, not from Congress. Although Cordray or his deputies provide updates on the bureau's actions and show up at congressional hearings, Cordray is directly accountable to Congress in only one regard: Congress passed the law that created the bureau.

Congress could always change the law if enough members wanted to. So far, that has not happened, to the chagrin of the bureau's critics. Besides, Congess is on break.